Tag Archives: new product management

Inbound product manager or outbound product manager – what is the difference? We’ll look at the overall role, and the breakdown of responsibilities.

Product Manager Role Definition

More often than not, people talk about product managers without the qualifier of inbound or outbound. We wrote an article last spring where we discussed the role of the product manager. Michael Shrivathsan defined the role of product management as being split into six areas:

The product manager is responsible for interacting with customers, marketing, and sales teams. This communication helps the product manager develop an understanding of the market. The product manager also researches the market – understanding competitors and existing products. From the understanding he gains, the product manager can identify needs and opportunities.

The product manager then works to turn this understanding of market needs into a set of requirements that drive the creation of a product.

Product managers shepherd the product through its life cycle. Product managers identify how the product will evolve and adapt to changing market needs. The product manager may drive the evolution of the product to compete in additional markets.

Product managers also help prepare the company to successfully sell the product. They define strategies for attacking the target market. They help the sales team understand what the product does, and how to position it against competitors. And they support the sales team in the field.

How do we split this up into inbound and outbound?

Inbound Product Management

The inbound part of of the job focuses on understanding what the product needs to be.
Inbound activities include

Understanding the market needs and our capability to meet them.

Defining a product strategy to meet those needs.

Planning the creation of the product, including documenting requirements.

Outbound Product Management

The outbound part of the job focuses on making sure that the product is a success in the market.
Outbound activities include

Defining a go-to-market strategy.

Preparing the sales team with an understanding of the product and market.

Supporting the sales team in execution with a focus on multi-customer activities.

Soundbite

Inbound product management is more about listening, and outbound product management is more about talking.

One of our readers is working on determining product manager staffing levels for her company. While every company is different, it always helps to understand where our peers are. We do some in-depth analysis of the 2006 Pragmatic Marketing product management and marketing survey to see how other companies set their staffing levels.

How Many Product Managers?

The first thing we want to identify is how many product managers the survey respondents employ. To make this meaningful, we need to review the product manager staffing levels in light of the revenue levels of the companies. Companies often split the strategic product management activities between product managers and product marketing managers. We’ll look at both. To keep things in perspective, in this and every dataset, we’ll identify the number of respondents in each category.

There are a couple interesting blips in the data.

Companies over and under $50 million in revenue have roughly the same absolute product management staffing levels, even though they represent a 4X range of revenue.

There’s either a huge jump in staffing over the $500 million revenue level, or a large drop-off at the over $1 billion level.

This data only shows absolute staffing levels, and not the staffing levels relative to the number of products being managed.

How Many Products per Company?

We’re combining the product manager and product marketing manager staffing levels for the rest of the analysis.

The survey asked each respondent how many products they managed. We used the averages (by company size) to approximate a generalization of products per product manager. Here’s what we found when we combine the number of products managed with the absolute staffing levels for PM/PMM.

The huge jump in number of products across the $500 million revenue line might be explained by the higher staffing levels. Or it might be representative of consolidation and higher revenue levels per product for the companies with more than $1 billion in revenue.

Relative Staffing Levels

We started this analysis to help a reader do some strategic planning. Part of that planning is looking at relative staffing levels. These relative levels will also help us counter or validate the statistics above.

Product Management vs. Sales

Many product management activities are in support of marketing and sales departments. To stay strategic, we have to remember to leverage the PM/PMM efforts across multiple customers, and not squander them on individual sales calls.

The companies with over $1 billion in revenue have by far the largest sales and marketing teams, as well as the lowest ratio of PM/PMM to sales and marketing staffs. This may be representative of additional support within the sales and marketing teams, or it might be a red flag that product managers are being stretched too thin.

Product Management vs. Implementation

Inbound product management involves heavy interaction with the implementation team. We define implementation team as the combination of design, development, and quality assurance. For our interpretation of Pragmatic’s data, we combined dev-lead, development, architect, and user interface specialists with quality assurance to calculate our implementation team sizes.

With the exception of the smallest companies, there’s a pretty consistent ratio. This also tends to support the premise that companies in the $500 million to $1 billion revenue range have more products than their larger and smaller peers.

It would also be really beneficial to see the break out of development and quality staffing levels within the implementation team.

There’s actually more consistency in staffing levels than we expected to find. Unfortunately, the processes that teams use, profit models and other factors make it really hard to draw concrete conclusions from the survey data. But the consistency of relative staffing models does help us set expectations or sanity check our staffing decisions.

Trying to unearth more trends in the 2006 salary data from the Pragmatic Marketing annual product management and marketing survey. In this article, we look at total compensation relative to the revenue of the managed products, the company size, and the company age. More fun with numbers.

Product Manager Compensation vs. Product Revenue

The survey asked:

What is this year’s expected revenue target for the primary product you manage, if any? (in millions of US$)

We created a scatterplot of the compensation responses relative to the product revenue targets:

There wasn’t an obvious trend in the data, other than noting that the highest paid respondents all had responsibility for multi-million dollar products. Note that the product revenue scale is log-based.

Maybe higher salaries correspond to larger companies.

Product Manager Compensation vs. Company Size

When we look at the average compensation of product managers versus the size of their employers, we see the following:

For companies that are under a $100 million in annual sales, there seems to be a trend that larger companies pay better. This might be reasonable as a characterization of the SMB (small to medium business) space. Larger companies may have a similar curve, but lower. There isn’t enough data to support this characterization – call it speculation.

Product Manager Compensation vs. Company Age

Do younger companies pay better? One might hypothesize that product managers are better appreciated by new / young companies, for whom a single product failure can mean failure of the company. Alternately, “old” companies have been around because they have successful products, and therefore reward their product managers more handsomely. Who would be right?

If we characterize the companies by the two dimensions of age and size, we can map out a grid and see if there’s any interesting trends that are visible.

First, we look at the number of responses within our data, mapped against the two dimensions.

We have a reasonable spread of data, with only one empty box (11-20 year old companies under $1 million USD in sales). Almost 20% of our respondents work for well established companies with more than $1 billion USD in sales.

Looking at the average total compensation for product managers in each box of our chart, we see the following average salaries:

OK, that reads like an eyechart – let’s make it more visual.

The green bars represent higher than average averages. That is, the average total compensation in a given cell is higher than the average of all of the data.

Younger companies (under 20 years) at the high end of the SMB space ($50-$100 million USD sales) pay more, on average, than the average of all companies.

Companies with a “youthfull but established” age of 11-20 years also tend to pay above the average.

Conclusion

There aren’t any obvious and dominating trends in product manager compensation versus company size or age. There are some subtle trends in the data.

These trends may not provide clear guidance about who to work for, but that doesn’t matter. All politics is local. The right product, team, and culture will make more difference in quality of life than a 10% pay bump.

The extra slicing of the data may help you make a more compelling argument in your next performance review or salary negotiation.

Pragmatic has some good detailed analysis of the data within each year’s survey results. We thought it would be interesting to look at trends over time. Interaction design tells us to focus on personal goals as defining the framework for how someone approaches their job. Surveys aren’t really going to capture those driving goals, or things like utility, job satisfaction, etc. The closest thing we have to a normalizer is looking at product management salary trends over the years of the survey. We also don’t have normalizing data that would show us years of experience, cost of living, or a normalizing stock-option method (like Black – Scholes) to create an “equivalent compensation” analysis across the years.

Within each year’s results, there are some demographic breakdowns by region of the country – but those only help a little. Markets like Silicon Valley, Austin, and Boston will skew the data relative to smaller markets. It would be interesting to see (in future survey results) what the salary data looks like as a scatterplot versus a cost-of-living index for the locale (city, not region) of the respondants.

We saw salary rises immediately following the dot-com bust, followed by some stagnation and deflation in recent years.

If we adjust for inflation we see some less optimistic annual changes in real earnings.

2001: 0.7% Loss in buying power

2002: 3.2% Increase in buying power

2003: 4.0% Increase in buying power

2004: 3.3% Loss in buying power

2005: 4.2% Loss in buying power

Looks even worse. If we show the same graph as above, but in 2000 dollars, we get the following:

This highlights the fairly rapid decay in product manager salaries over the past few years.

Women’s Suffrage

Notice also the unreasonably large gap between blue (female) and maroon (male) overall compensation data.

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Who Should Read Tyner Blain?

These articles are written primarily for product managers. Everyone trying to create great products can find something of use to them here. Hopefully they are helping you with thinking, doing, and learning. Welcome aboard!